NOTE: After the original publication of this story, AG Madigan's office offered their version concerning the distribution of funds. That response is below ...
CHICAGO - Attorney General Lisa Madigan continued distributing funds to legal firms Tuesday, this time, $4.7 million onto Chicago's Legal Assistance Fund. Last week, the first $4.5 million went to the Metro-East area Land of Lincoln Legal Assistance firm to provide free counsel to people who are going through foreclouse. The funds the attorney general's office is distributing are from the $20 million Illinois won in a national lawsuit against the big five mortgage providers.
Tuesday, Illinois Review looked into the first mortgage counseling grant issued last Friday and found generous Democrat campaign givers among the Land of Lincoln Legal Assistance Foundation board members. We also provided forms provided by the Attorney General's office as to how the funds would be spent.
Madigan's office issued a statement on Tuesday's gift:
Today's announcement is among the first distributions of that funding, which as a whole will benefit legal assistance programs, housing counseling services and community revitalization efforts to counteract the impact of foreclosures on communities throughout Illinois. Madigan announced in April she would commit to distribute $20 million of the funds recovered in the settlement to legal aid services. The Attorney General's office is continuing to analyze grant proposals toward that goal.
"This grant money will translate into real help for homeowners who otherwise never would have received it, because the need far exceeds the current legal aid resources," Madigan said. "By ensuring that more homeowners in Chicago and suburban Cook County have an advocate, we can give more people a fighting chance to save their homes and help stabilize communities throughout the region."
Land of Lincoln's proposed staff of 10 lawyers alone will benefit $2.5 million from the lawsuit funds. The rest of the $4.5 million will go to buy new computers, provided office needs and hire more staff.
More about what Illinois Review found in our initial research into the mortgage settlement funds can be found at Madigan gives $4.5 million in mortgage settlement funds to legal
assistance org
CLARIFICATION: Illinois Review received a clarification from Attorney General Lisa Madigan's press secretary Natalie Bauer after publication:
To start, there are two separate means of relief coming to Illinois. First, homeowners will receive DIRECT assistance from the banks in the form of principal reductions and refinancing for underwater loans. That sum is anticipated to amount to $1 billion that will go DIRECTLY to consumers. The independent monitor overseeing bank compliance with the settlement just issued his first progress report today, showing that over 5,000 homeowners in Illinois have already received some form of direct relief as the settlement implementation is underway.
The second form of relief is the money that the banks will pay to the state itself in settling these claims. That amounts to about $100 million (not $20 million as you noted) that the state then will distribute to initiatives that will help counteract the effects of the housing/foreclosure crisis throughout the state. See the paragraph from the press release issued in February (attached in full) when the settlement was announced for the distinction:
In addition to direct relief to borrowers in Illinois, the Attorney General’s office will recover money from the banks to remediate the effects of historic levels of foreclosures on homeowners and communities, including funding for legal aid services, housing counseling, outreach to borrowers, housing policy development and community revitalization.
The $20 million figure you cited in your posts pertains to the amount of the settlement funds going to the state that will be distributed to legal aid organizations. See the release announcing that commitment here. The grants recently announced for Land of Lincoln and LAF are part of that $20 million commitment to legal aid organizations, not the full sum of relief that Illinois will receive, whether through funds to the state or through direct relief to Illinois consumers.
